Knight Frank’s Rural Report

Hay rolls and harvested field at sunset. Tuscany, Italy

It is out again, full of fascinating and useful information, facts and figures.

The Knight Frank Rural Report is a bi-annual production which delves deep into all current rural matters. It should be read by all land and estate owners, not to mention their professional advisers. The report is insightful and progressive and I always find it very forward-thinking in its advice in what is often considered a rather dusty and old-fashioned world.

This edition, not surprisingly, starts with an intelligent look at the largest single issue currently affecting us all and particularly the farming industry.

Download the Rural Report here.

What does Brexit mean for current and future land prices? The weak pound, low interest rates and favourable tax incentives make land more attractive than ever however the threat to future subsidy support makes it a more risky investment, but are there opportunities?

The weaker Sterling makes UK produce and exports cheaper in a world market giving farmers a much needed financial boost but how might future immigration plans impact intensive farming which relies on the influx of seasonal European workers?

The regional farm land value focus makes for interesting reading. In my role purchasing residential farms and estates on behalf of my clients at The Buying Solution, I understand and appreciate the significance location, amongst many other factors, has on value.

I would concur that, despite the turbulence caused by Brexit, land values have held up well. This is particularly interesting given the large surge of openly and privately available land that has become available since the beginning of August this year.

The report on the Raynham estate in Norfolk is a valuable read for any landowner. The estate is investing for the future and it highlights the importance of the next generation and maintaining a successful and profitable enterprise as we move through the 21st-century. This is further explained and expanded upon in the penultimate article “contemporary thinking for the modern estate.”

The Rural Report is an essential read for all of us involved in the UK farms and estates industry.

 

Challenges and opportunities for the Trophy Hunters

I deal with a number of UHNWI’s who are looking to purchase property that are both intergenerational assets for their portfolio but also allow a diversification of wealth. However nearly all without exception, want best in class, namely “The Trophy Asset.” I work for a small and select client base focused on the golden postcodes of prime central London.

My clients have perhaps experienced the most volatile market conditions of any group within the past three years. The majority are international buyers who have been most affected by changes in the UK taxation but on the upside, due to their wide international profile, have had the most to gain from the weak sterling.  Clients who acquire a £10m house that is in effect a pied a terre or portfolio asset and therefore liable for the 3% surcharge, have seen stamp duty on the purchase double in two years. However on the upside, cost of purchase, inclusive of tax, would have fallen by 19% in US dollar terms over the same period.

Despite the continued uncertainty around Brexit and the fiscal drag of taxation many of my clients, potential clients and indeed wider UHNW buyers, still continue to see London as a safe haven in a global context. This is further evident by the last few top end transactions that have just traded. Examples include a leasehold house in Belgravia that recently completed for just shy of £100m, a complete boutique development of six apartments and a house located next to Buckingham Palace transacted for £112m, a house in SW10 for £48m, a house in W8 for £85m plus, an apartment in SW1 for £20m, various apartments in W1 for in excess of £25m, to name but a few.

However as the market continues to be exposed to fluctuations in buyer and seller sentiment, as well as the general economic pressures and with increased exposure to SDLT, CGT and IHT, clients are really focusing the mind on the liquidity that the very best addresses afford.

My search for the trophy assets continues.

What’s the ideal estate?

Buying a house using a buying agents

There remains strong appetite for the very best in class estates, these would be within two hours of London to the west, unblighted and have 1,000 acres of mixed farm and amenity land, and a beautiful period, ideally not-too-large Georgian house in reasonably good condition. For an opportunity so rare it is likely that buyers would have to, and must be prepared to pay premium prices.

The interested parties would predominantly be successful British buyers but there is always interest from a few international individuals particularly keen on the sporting and amenity side of estate life. Currently there appears to be more interest from Middle Eastern countries than other regions of the world which we suspect is as a result of increased tension in the region and the long-term desire to own a ‘trophy asset’ that can be used in the summer months and during the shooting season.

Most sought-after estates are located in an arc from the M1 to the M3. They would have good communication links back to the capital but still be within pretty, unspoilt and rural countryside. Good access to a high quality market town is imperative, areas such as Chipping Norton, Stow on the Wold, Hungerford, Marlborough, Alresford and Winchester are always popular. The ‘perfect estate’ would need to be quiet and private and with no foot paths affecting the house and park (there will be foot paths across the land, but ideally as far away from the house as possible).

The ideal estate size would likely be between 1,000 and 2,000 acres with 1,000 acres of good quality arable land and a couple of hundred acres of mature grass parkland, perhaps a few hundred acres of woodland, ideally mature and well laid out for sport as well as providing an attractive landscape and view. Other qualities would include a river with good quality, chalk stream fishing and lake in the park. The land would include enough cottages for staff but not too many to be a burden, perhaps between five and ten cottages with appropriately sized quality farm buildings.

There is less of a desire for very large, old houses. Preferably there would be an eight bedroom Georgian house in mature parkland setting with a long winding approach drive. There would be lots of original period features, but ideally the house would be in good structural condition with up to date M&E.

It is worth pointing out that an estate like the one described above is like finding a needle in a haystack and invariably there will be compromises to be made on one or more aspect.

Buyers

There are rafts of buyers, national and international who desire such a country estate. In our experience the buyer would typically be a very successful Englishman with a young family. Having said this, there is interest from all nationalities and currently we are seeing Middle Eastern, American and a few Russian buyers.

Prices

An estate like this could be anything between £20m – £70m depending on the location and size. They very rarely come to the open market and are more often sold and bought privately.

As the price range increases so does the likelihood of a vendor wishing to sell confidentially. In almost all cases they take advice from a selling agent but choose to offer their estate to only a handful of carefully selected individuals. By offering property privately, vendors avoid publicity and in many cases we are invited to look around before an owner has even told his own family. Sometimes the vendor would prefer to tell his friends and family only after a deal has been concluded as he is able to say “he was approached with an offer he couldn’t refuse” which saves the embarrassment if he was in a position where he had to sell. A private sale means only a few visits rather than reams of viewings where many people may just be being nosy. If a private sale fails there is always the back up of going to the open market with a fresh launch so the property does not look like it is “old news.”

TBS in The Sunday Times – A seat on the train

Where to buy a house if you want a seat on the commute.

It’s an enduring mystery — how do you find space to sit down on a rush-hour service to London? Hugh Graham at The Sunday Times solves the commuter conundrum. Bobby Hall at The Buying Solution comments.

Read Hugh Graham’s full article on TheTimes.co.uk:
Where to buy a house if you want a seat on the commute.

TBS in Country Life – The Estate Buyers

The country estate market: who are the buyers?

They are few in number and largely far beyond the pocket of most country-house buyers, but, with a clutch of interesting estates coming to the market this autumn, who will be the likely buyers? Arabella Youens at Country Life magazine finds out. Mark Lawson at The Buying Solution comments.

Read Arabella Youens’ full article on CountryLife.co.uk:
The country estate market: who are the buyers?

TBS in Horse & Hound – First Impressions

First Impressions: How to sell your equestrian home – fast.

From clean troughs to full haynets, Carla Passino at Horse & Hound magazine finds out how to ‘wow’ prospective buyers at their first viewing of your equestrian property. Bobby Hall and Katherine Watters at The Buying Solution comment.

Read Carla Passino’s full article on Horseandhound.co.uk:
First Impressions: how to sell your equestrian home -fast.